Betting on politics: the next Tory leader

Jacob Rees-Mogg has been making waves in the betting markets. Indeed, the Betfair digital odds on him being the next permanent Tory leader are now only 9.00, equivalent to an 11% chance.

This puts him in third place, behind only Brexit Secretary David Davis (5.5) and Chancellor Phillip Hammond (8.2). Indeed, both Boris Johnson (10.5) and Amber Rudd (12) are seen as longer shots even though they are widely considered more qualified and more popular in the Tory party than the "Moggster".

This raises the question of whether it is worth laying (betting against) Mogg.The best laying odds are9.6 (10.4%), equivalent to betting on him not being leader at 1.12. If this were a completely risk-free bet, then the 11.8% return might be worth pursuing, but it isn't, as the example of Jeremy Corbyn proves. Even if you give him only a 3% chance of winning (which seems reasonable given the unpredictability of such contests), then the returns fall to an unattractive 7%.

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Another factor to take into account is the length of time before the bet is settled. While it's possible that May could be forced out in the next few months, there is a good chance she could make it to 2019, or even longer.

Assuming that it will be two years before a new leader arrives, you're looking at an annual return of just over 3%, which in my view is not worth hanging around for (I'd always advise you to aim for at least an annual return of 10% on each bet). So the best bet may be to sit this one out.

Instead, I'm going to suggest a bet on the Virginia Gubernatorial election. The Democrat candidate Ralph Northam is leading in the polls in a state where Hillary beat Trump by over 5%. After the global furore over the past few days' events in the US, I suggest that you take Paddy Power's 4/11 (73%) on the Democrat.